The Criminal Records Corporation Is Operating at Its Minimum Efficient

question 43

Multiple Choice

The Criminal Records Corporation is operating at its minimum efficient scale, selling 10, 000 records per month via late-night cable TV advertising.It currently buys pressed records from Hole-in-the-Middle, Inc., which has a minimum efficient scale of 100, 000 records per month.Which of the following should Criminal Records do?

• A)Continue to buy 10, 000 records from Hole-in-the-Middle, which can make the records more cheaply.
• B)Buy 100, 000 records from Hole-in-the-Middle, so that company can reach its minimum efficient scale too.
• C)Buy Hole-in-the-Middle and use its facilities to manufacture the 10, 000 records it needs.
• D)Buy Hole-in-the-Middle and stop operating as Criminal Records because Hole-in-the-Middle is the more efficient business.
• E)Buy Hole-in-the-Middle and stop operating as Criminal Records because Hole-in-the-Middle is the larger business.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset up to a specific point in time.

Initial Cost

The purchase price of an asset or the costs associated with acquiring or producing it, before any depreciation or amortization.

Intangible Assets

Intangible assets are non-physical assets possessed by a business, such as patents, trademarks, and copyrights, that have value and give the business certain rights.

Research And Development

Activities related to the innovation, introduction, and improvement of products and processes.